CMS Releases Final Rule on Medicare Overpayments

Docs will only have to look back 6 years, not 10

WASHINGTON -- The final rule on how physician practices must handle overpayments from Medicare has some good news for physicians -- or, at least, news that was less bad than it could have been.

The original version of the overpayments rule required physicians to look back through 10 years of claims to make sure Medicare had not overpaid them, but the final rule, released Thursday by the Centers for Medicare and Medicaid Services (CMS), requires only a 6-year lookback. "Specifying the length and other parameters of the lookback period provides additional clarity for providers and suppliers who have identified an overpayment," the agency noted in a fact sheet about the rule.

"I think reducing the lookback period is a positive move," said Tony Maida, JD, partner in the Health Industry Advisory Group at the law firm of McDermott Will & Emery, in New York City. Maida also advised CMS on drafting the proposed 60-day rule in his previous position at the Department of Health and Human Services Office of Inspector General.

Wanda Filer, MD, MBA, president of the American Academy of Family Physicians (AAFP), was slightly less happy. "Six years is better than 10 years, but not as good as 3 years which is what we would prefer," she said. "We will continue to encourage CMS -- maybe once they've got the learning curve established on 6 years, maybe 3 years may become more palatable." The academy discussed a 3-year lookback in a letter it sent to CMS in April 2012 after the proposed rule was published.

The rule also clarifies what CMS means when it gives providers 60 days to report an overpayment and refund the money to Medicare. "Some providers say, 'I got a hotline complaint that we've billed Medicare incorrectly, and I only have 60 days to find it and [return the money],'" said Maida. "That's not what the rule says ... The clock doesn't start to tick as soon as the call comes in, as long as the physician exercises reasonable diligence in looking into it."

Instead, Maida continued, once such a call is received, "then there's an obligation to decide if that call gives you what CMS calls 'credible information' of a potential overpayment and if it does ... then the provider should exercise reasonable diligence to look into it, and determine whether in fact they have received an overpayment and how much that overpayment is."

"And once you go through that reasonable diligence process ... At that point the 60 days to report and return [the overpayment] starts to run," he said. "Now if you get the hotline call and you don't do anything, CMS says, 'Well, you failed to exercise reasonable diligence and you may be violating this rule.'"

Filer, a family physician in York, Pa., said the academy appreciated the fact that CMS is using a voluntary refund process for overpayments. "Our members very much want to give the correct billing, and when there is an error, it's almost entirely inadvertent," she said.

On the other hand, Filer said she hoped CMS would interpret "very gently" the idea of physicians having a "clear duty" to report overpayments. "The clear duty of the family physician is to take care of patients," she said. "The vast majority of overpayment is inadvertent mistakes from well-intentioned physicians and their practices."

Looking for overpayments "pulls you away from real work, which is taking care of people," she continued. "We know that CMS has to strive to protect the Medicare trust fund, but striking a balance that allows physicians time to take care of patients and not distracting them is important these days."

On the whole, the rule is a positive development, Maida said. "You'd find some lawyers who'd say they would just as soon not have the regulation and let the courts decide what the overpayment requirement was from [the federal] statute, [but] my feeling is having a regulation is better than no regulation, because a regulation provides some guideposts and benchmarks" that physicians can use to stay in compliance with the law.

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